Readers’ Forum: You’re fired! Now come back for 20% lower salary!

I was laid off 4 weeks ago in a reduction in force. Last week my former boss called to ask if I would come back — with a 20% cut in salary. I am really torn since I liked my job and the people I worked with. The job market is challenging so my prospects are not beautiful at this stage. But the layoff was hard and I don’t know that I can trust the firm or senior management not to lay me off again. What would you do?

Is this a second chance, or a dumb move for this reader? I can’t wait to see your advice.

32 Comments

Well, I guess you have to consider your current prospects. If you don’t have a job, and the 20% cut is still more than unemployment, I say take your job back. And keep your job search going at the same time.

Sure, you can’t trust them to not lay you off again. But there’s nothing that says you can’t quit and take another job if you find one. It’s all about doing what is best for YOU, just as the company is going to do what is best for THEM. And if you don’t have anything better at this point, 20% less salary is probably still better than unemployment.

Cost cutting by the business is understandable, though harsh. Things really are tight so cost cutting can be expected. As the employee, this comes down to the same thing it always does: what value do you provide the company? Are you providing 20% less value now than you were before? In a lower economy, the answer to that really might be yes, even if you are doing the same work (if, say, the market your company serves is shrinking, for example). If you want the same compensation, you have to provide the same value and that might not actually be possible right now.

The thing is that chances are that the same business would think it outrageous if you demanded a 20% salary hike when things are going well later on. If I were to even consider coming back, I’d drive some hard bargains and make the evaluation of worth explicit. I’d talk about value to the company and how that has changed due to the market–and how that is likely to change for the better in an up market. Make a push for an automatic raise when things get better–preferrably based on something formulaic (like a specific sales level). And I’d push for re-instating seniority and vestment if those are a factor (and they almost always are).

The bottom line, though, is if you think the work you provide is worth more, then go out and prove it in the only way that counts: convince another company to pay you more.

I would say yes, but with the 20% pay cut you will work 20% less time. Put it in writing in the employment contract that you get Fridays off, unpaid. It would also be fair to expect your vacation and PTO accrual to be pro-rated as well.

Explain that you’re open to restoring 100% time when the company is doing better and can restore your pay too 100% of your previous salary (plus normal increases).

Then use your Fridays for job-hunting, solo work (be sure your employee agreement doesn’t prohibit this), or getting more things done in your personal life.

Treat it like just another job offer, except this you know more details about. Would you take the same job at that 20%-off price if offered by another company? If yes, then why would it matter if it came from one that just fired you?

Still, you should not stop your job search even of you take the offer. By firing you first then offer you a 20% discount, rather than the other way round, it told you the company was either playing games, or the management don’t know who are critical to their operation and only found out they really needed after you were gone. Either case is not a company you would want to stay for long.

Can you “trust” them not to fire you again? Of course not! But how can you trus any other company not to fire you?

To Bill: would you automatically offer to work on Saturdays too if you boss gave you a 20% raise? If not, why should a 20% cut means Fridays off? Depending on circumstances, it may work, but it should not be a given.

This can be a tough one, depending on the external circumstances. I’ve been laid off from one position that I’d want back, but it’s not the job or the company that was so great. In fact, neither the job nor the company were that great. But the location was perfect for me. In 2003, I was laid off from a position in the Denver area, and had to relocate to the Plains. I’ve only managed to get back to visit the Rockies twice since then. If that company had made me the same offer – come back at a 20% cut – I’d have jumped on it at the time. That offer would have been $24000 more than the job I ended up with about two weeks after that layoff, and in a part of the country I’d kill to live in again. I wouldn’t have had to relocate, or take a second job. Life would have been better in the short term. Of course, looking back on it, that layoff may have been the best thing to happen to me, since it lit a fire under my butt to make everything right again, but that’s not something you’re going to know right now.

Think about this carefully because it is not at all the same thing as going back to a job you liked. You know these people have no respect for you so you know that it’s a short-term deal just to keep the wolf from the door while you’re looking for a good job. If you think you can do the job adequately without becoming bitter about the way they treated you while keeping up a very active search for a new job, then go ahead. Otherwise unemployment and a full time job search might be better.

Take the 20% salary cut and make it known that you will be working 20% less until your original salary is restored. If they disagree, compromise at 10% less work (half-day Fridays, every-other Friday off, etc.). Most of all, use HTH advice and keeping looking for a job elsewhere.

I think you need to have an honest discussion with your former boss about why they’re bringing you back at a 20% discount and get in writing conditions under which you’ll return to your old salary level.

If they balk at this or aren’t forthcoming, that tells you something. Evaluate the offer not just by the numbers but how they respond.

Finally, something else to think about: See if they would be willing to have your layoff be counted as something else for benefits purposes. Sometimes, you’ll have to start over for vesting for retirement accounts or for wait periods for health insurance, etc. If you can get them to consider you “on sabbatical”, this will make things much easier for you. It also doesn’t cost them anything directly (and is probably cheaper overall since they don’t have to refile paperwork).

If the company did a reduction because they genuinely needed to reduce cost, then they may have cut too deeply and would like your expertise back, to complete work or projects that may be time critical. If that’s the case, negotiating “20% less time for less pay” may be a moot point and may be a deal breaker. (If you’re in engineering or manufacturing for example, many companies have already done a reduction in hours and pay combined – it’s unfortunately a harsh reality for the near future.) Since this wasn’t mentioned in your posting, your major concern seems to be management attitudes and security.

Some points to consider:

1) If you are on unemployment and are offered a position, check your state laws regarding rejecting an offer of reemployment. You may be questioned and possibly lose benefits if you turn the offer down, even with the changed circumstance.

2) Is the company still viable after the reduction? Did they reduce staff to cut costs, or was it a “last-ditch” effort to survive? If the latter, then guarantees of keeping your position won’t matter, everyone may be a target anyway. If the former, your returning may be a way to prove you are willing to go the extra mile to help the company thrive – IF you want to stay there.

3) Think about why you were eliminated. Was it seniority? Poor reviews? A grudge from someone in management? Phaseout of your department? Were you overpaid for your position? All of these, external and/or internal, will have some effect on whether you would be asked to stay again should things go sour. It may be painful but you should evaluate carefully why you were let go. If the “whys” aren’t resolved and you return to work there, you’ll be right back at square one.

4) Can you afford to take a 20% cut at this time in your life? Conversely, can you afford to be unemployed for at least a year or two? Yes, there are wonderful success stories about folk finding new jobs quickly. The nasty reality right now is that the vast majority of competent, good workers DON’T.

I’d keep on with your job search even if you return: stay active with all your contacts and search routes. Since you liked your situation, returning to a “comfort zone” of work you know is a plus while you’re continuing to search. You may have to readjust with peer coworkers who may be dealing with “survivor’s guilt” or concern for their own jobs. As for management, asking about future layoffs may not get you warm fuzzy answers; be confident but wary, keep your ears open for rumor and keep any offended feelings out of the office.

Treat this just like any other job offer. Do not mention the 20% pay reduction at all. DO NOT tell them that they will get 20% less productivity since you are getting 20% less pay. Talk like that makes you look petty and mean. Assume they are being decent to you and be decent to them. As Nick often says, what you were paid on your previous job is often irrelevent. Consider the total package. If it is worth it to you, then take it. If having some more vacation time makes it worth it to you, then negotiate some extra vacation time. Chris’s suggestion to arrange to maintain work continuity is a valuable suggestion.

Tell them to get fuck themselves. People on this board seem overly eager to “settle” and are scared about the future. Don’t be. Live modestly. Keep your expenses low and then you won’t be an indentured servant who needs to evaluate whether or not you should accept the same job at 20% less. If you take less, anyone will be happy to provide it!

I think you should overthink it to death, get angry, make demands of them, tell them you’ll work 20% less…and eventually they will find one of your previous coworkers willing to do the job for less money. Suck it up, either you want the job and less money is better than none, or tell them no thanks and move on.

Depends on your current financial situation. If you have nothing to lose then bargain with them — what do you have to lose. Say you will take a 10% reduction. If they really need you (or else why would they even approach you), they will play the game.

Man, this is one fired up discussion. I’d like to ask the f-you contingent, Is the “f you” answer mostly emotional? If not, what’s the basis for it?

To those advocating “suck it up and take the cut if you need the job”, how do you get your mind back to what you think you are worth if you work day in and day out for 20% less than you were making at the same company? (What’s not clear is whether the reader who asked the Q was being offered the same job again… or a lesser job… I’ll try to find out.)

Nick, it’s a rare bird who can take a 20% pay cut from an employer and NOT start mailing it in, at least in part.

And let’s not overlook the implication for unemployment that Alicia brought up. From the company’s perspective it’s a win-win. They either have that person’s services at a 20% discount, or they’ve got a way out of paying unemployment for someone they laid off. Bastards.

I’d say telling anyone to eff off is a mistake because you always want to be remembered as behaving in a professional manner, but I understand the temptation. The company is treating this person very very badly.

If they had been honestly attempting to reduce expenses they would have offered something like reduced hours or furloughs BEFORE the layoff. They are either up to something sneaky like Another Steve says or they’re just incompetent. In either case they are treating this person like dirt.

As a person who was ‘reduced’ over 6 months ago, I can see the temptation to go back to the ‘devil you know’ versus the devil you don’t. I think there have been some great suggestions here, but one that I found missing, so I thought I would mention it.

What if, you looked at this as a ‘proposal’ and thought seriously about becoming an independent consultant/contractor, etc? If you look at problem from many different angles, even if becoming a consultant/contractor isn’t the answer, it might lead you to a better decision.

Personally, going back after a reduction in force could have an emotional impact that might not be good for you. Take the time to think it out before going back.

I also agree you need to keep networking and looking for the next great gig, because this one definitely won’t be there long…they just need you for a temporary gig, even if they don’t admit it to your face.

I want to thank everyone for the many helpful insights regarding the interesting choice I had before me. I sent my query to Nick a few months ago, and it is actually sort of a good thing that it appears now, since I can validate a lot of my own reasoning over the past 16 weeks, and let you know how things have turned out.

I think many of you can empathize with the various thoughts and emotions after a layoff –this one was really hard as I had a fairly senior position with the company, and had only been there 8 months (and was formerly with a large defense contractor for 6 years, so I had lots of tenure there as cover for layoffs). A pretty grim day where I arrived for work, they took my laptop and phone, and ushered me to the door. Wahoo! Welcome to the new economy!

So you can imagine that an offer to come back after that sort of shock can actually make some sense — I was so unprepared, and even though I was treated pretty bad, I sort of needed a job. So many of the thoughts the group has posted were going through my head, but at the end of the day, Scott and Erika sort of nailed it — I basically thought f*** them (but did not tell them), and adjusted the lifestyle and figured a way through the summer. I felt like going back might actually make it harder to make a clean break, and to be honest, I am not so sure the company is in a position to survive for the next year, let along the long term.

I know a lot of colleagues in the same boat, so I was really pleased that I secured a new position last week (they want me to start in November, but I am trying to get in a bit earlier if possible). Although the uncertainty was really hard, I’m glad I just sucked it up and moved on, as I think I am actually more confident and better now at dealing with the tougher economy. It would have been easier maybe to go back for that paycheck, but I think I would regret that decision ultimately.

It’s been about the hardest summer I’ve had, but definitely learned a lot (you definitely learn who your real friends are when you’re out of work!), and somehow stronger for the experience (though I am not signing up for this again!). I’ll keep up the items I’ve learned from Nick, and contribute to the boards when I can. Thanks all.

I would take the job back just for keeping the employment gap small and continuing your experience. This is going on the idea that you enjoyed working there. At the same time, I’d keep on looking for something else, but it might be awhile before something else comes along. I’m currently employed, but decided to change career paths at a bad time. Basically, I’ve been looking for over a year now. There have been some nibbles, but it really is tough compared to what I experienced just two years ago.

Whether this is a good offer depends upon what has changed, if anything, about the job. Are your duties the same? Is the job less demanding, more demanding, or the same? Are there any benefits that you could get out of them that they are not putting on the table such as more vacation time? That vacation time could be used to go on job interviews as they come up. I would definitely look into reinstating your time of service to the company.

Making a decision to go back also would involve considering exactly why the company reduced the workforce in the first place. I’ve seen companies in my area laying people off while hiring others at lower salaries. It seems that some have used the times to justify salary reductions. That may not be what is happening with this company. Maybe they really couldn’t afford to pay all of those people, and they are seeing a slower upward trend now. Although you did work there, you still need to do your homework and study the company just like you would any other company.

As far as being able to trust anyone not to lay you off, I think that is impossible. Nobody is totally safe from that one, which is why networking and developing yourself are so important. You never know, for certain, when you might be moved along. Sometimes that is a good thing that sparks creativity and growth you weren’t aware was possible.

@Brian C: Thanks for updating us on the outcome. My compliments on using the “f-you” reaction to spur yourself on, but without actually communicating it to your old employer.

Two more things: Via e-mail Brian confirmed two important things. First, the job he was “invited back” to do for 20% less was the SAME job from which he was laid off. Second, he was able to maintain his comp level on the new job he has accepted. Worth thinking about.

Finally, he makes no secret of the fact that the experience hurt like hell. Thanks, Brian, for sharing it all. And thanks to all for the great insights, suggestions, and sharp words for the old employer.

I would say fuck off because the company is showing me no respect and is abusing me due to the economic conditions today…. I believe more in myself than most of you posters do….. I would have a job to my liking in no less than 2 months.. I have done it before…. those who sell thmselves short deserve what they get.

Congrats to Brian for getting a new job! And thanks for sharing your experience here.

I’d like to clarify that my suggestion of working 20% fewer hours for 20% less pay was meant as a means of protecting oneself against employers who are just trying to connive to reduce your pay.

If you were to agree to come back full-time for 20% pay, with a verbal understanding that your former salary would be restored after the business is doing better, then you can count on that deal being forgotten.

Put it in writing and associate the reduced pay with proportionally reduced work. This creates an incentive for the company to restore your salary if they want your full-time work.

That said, I can also get behind the idea of “bird in the hand is worth two in the bush” — if you need the job in the short term, exercise some good blue-collar values and take the job.

Regarding Oliver’s question if I would work Saturdays for 20% extra pay — yes, for example I’ve worked extra when I was trying to achieve my goals for a merit bonus.

CNNMoney has an article that is certainly a part of the ongoing deflation debate. Please consider Cut my pay … please!

With unemployment as high as 9.4% and job prospects scarce, job seekers are willing to accept as little as half of what they were making before, if it means finding a job.

In a recent survey, 65% of out-of-work respondents reported willingness to accept wages up to 30% lower than their previous compensation. And, 3% and 4%, respectively, said they would accept up to 40% and 50% of prior wages, according to the 2009 Annual Career Fair Survey released by Next Steps Career Solutions.

“I see it every day,” said Jay Meschke, president of EFL Associates, a division of professional services company CBIZ. “People are out there accepting positions as much as 50% below what they were making before.”

“If it is a choice of putting food on the table, paying for a kid’s school expenses, or attempting to get on a healthcare plan — many people are flat out accepting jobs well beneath their former market values,” he said.

What if we all asked companies to start offering their products and services at 20%, 30%, or even 50% off?

I realize that in some industries companies are having to offer heavy discounts. But what if people, right off the bat, walked into stores/retailers/etc. and said, “I’ll consider buying this if you knock 20/30/50 per cent off the price.”

How many would take it and how many would laugh at you? If employment is a free market (and I believe it should be), why not follow its lead?

Wait a minute… If you are still providing the same amount of value / profit for the company, then why should you accept a 20% pay cut? All you are doing is putting 20% of your paycheck into company profits when you do that.

If the company cannot get the same profits on the fruits of your labor as the could before, then it might make sense. But if there is no loss in value because of what you provide to the company, then why should they expect you to take a pay cut?

How many companies are trying to be cheap with their employees nowadays “because of the economy” while they are also announcing nice, fat profits to their stockholders? Increasing profits while “encouraging” employees to take pay cuts isn’t right.

To Nick’s question “how do you get your mind back to what you think you are worth if you work day in and day out for 20% less than you were making at the same company?”

I once worked for a company after taking a few pay cuts, the worst I reached ~25% of my original pay but working on 2 days per week (i.e. 40% work).

How did I handle that? Simple, I recognize the fact that my skill is worth differently to different company in different times. I work often as a consultant, and in difficult times, many clients cut back on consulting and thus business dried up for the company I worked for. I recognize this fact, that my skill is worth less than it used to due to the economy. BUT I also know that when the economy picked up, my skill will worth more again and I will get my chance to earn more money again.

Eventually, the economy picked up, I went back to working 5 days a week, but my pay reached only about 80% of my former peak salary. No problem! I found another job that pays as much as my peak salary in a few months’ time.

Throughout the whole time, I think the most important mindset to keep is that your pay is NOT a reflection of your worth as a person. There is nothing personal about it. The price my skill can command fluctuates just like the stock price of a company. All you can do it just keep building up your skills so you can get a better price. Fixing your price beyond the market price will only get you unemployed.

I’ve known folks who have used that kind of situation to “outsource” their talents back to the company while they pursued other options. That way they could still earn income and have independence to seek other opportunites.

I once accepted a 15% salary decrease to avoid being laid off, the company wanted to eliminate my position after retooling, but they needed me to backfill until the transition was complete.

It was during a horrible local and national reccession so I didn’t see any other options. I was able to help them during the interim and they gave me an opportunity to I learn a new skill in a higher paying area. They also accelerated my pay increases when I was promoted. That wasn’t part of our agreement, but looking back, I think it would have been acceptable for me to ask what they were willing to do in return. Business is buisness…